How to Use a Business Loan for a Home-Based Company
Even if your business is based out of your home, you still may have a need for outside funding so that you can produce your product or pay for other necessary costs. Fortunately, with numerous types of business loans to choose from, you can receive financing for your home-based business, and use it in ways that will allow you to grow your operations.
In this post, we’ll list a few different ways that you can utilize your loan for your home business.
1. Paying for Marketing Campaigns
One of the ways that you can use a business loan is to help increase your current marketing efforts. Many businesses – particularly new businesses – find themselves in a unique situation where they cannot invest in marketing until they have more money, but they also cannot make more sales until they’ve invested in marketing. A business loan is something that can help bridge this gap.
There are many different ways your at-home business can market itself. Investing in sponsored social media posts, online advertisements targeted to a specific audience, and search engine optimized (SEO) content are all excellent ways to get started. Additionally, reaching out to local media sources such as newspapers, magazines, and others may also help increase your level of public exposure. Using your loan, you can make necessary investments, and pay for marketing efforts that are generating sales.
2. Hiring Employees
Data from the Census Bureau reveals that over 20 million Americans are employed by what are considered to be “very small enterprises.” These enterprises, which have fewer than 20 employees, are often started in a single household and gradually expand over time. As your business continues to grow and bring in new clients, your need for additional help will inevitably increase.
The number of employees that’s right for your business will depend on your long-term goals and short-term financial constraints. Many small business owners prefer to outsource certain tasks such as accounting, marketing, and website development to individuals who are specialists in these areas. This makes it easier for you to focus on the aspects of your business that you do best. For example, if paying someone $30 per hour to perform a task you would otherwise be doing enables you to then make $40 per hour more for your business, then using your outside funding for hiring costs would be financially justifiable.
3. Investing in Technology and Equipment
For your business to remain competitive, it’s important to be as up to date with all relevant technology and equipment as you possibly can. Just like paying for marketing costs, many businesses have need to invest in technology before they’re able to increase revenue streams. Due to this, applying for a business loan to make necessary investments may be in your business’ best interest.
Investing in new computers and software that is specific to your industry is often something that’ll help earn you earn a very quick return. Additionally, if your business produces tangible goods such as jewelry, clothing, and furniture, having updated equipment is usually crucial.
There are many ways that your at-home business could benefit from applying for a loan. In general, these decisions are usually best made by using an opportunity cost perspective. If the cost of borrowing money in the present is less than the increase in revenue you can expect to receive, then a business loan may be a good fit for you.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.